Commercial Property Owners' Policy Coverage

Advance Cover

Developers and some Property Owners are involved in the development of properties either through the construction of new buildings or the refurbishment of existing. In either case the aim will be to sell the building upon completion for profit, or to lease it to tenants for rental income. If there is any delay in the completion of a project it could result in a financial loss to the property owner/developer. Advance cover is designed to protect such anticipated future earnings and indemnifies the insured for the financial loss resulting from a delay in completion of a project as a result of damage at the project site.

Alternative Accommodation

Usually applicable to residential properties. This clause gives cover for the loss of rent sustained and the necessary costs in re-housing the tenant whilst the property is reinstated. Cover is subject to a limit of a percentage of the building sum insured.

Book Debts

Covers insured against loss from non-payment of accounts following insured damage. Buildings Awaiting Sale. It may be possible to arrange cover for loss of rent/interest and expenses if damage occurs to a building at a time when the insured has contracted to sell their interest in the building and the sale is cancelled or delayed solely in due to the damage to the building.

Capital Additions

This extension provides cover for newly acquired and erected properties and alterations/additions to existing buildings without the need for immediate notification to the insurers. This is more common with larger portfolios.

Contractors All Risks

Property Owners who continually arrange minor alterations to and refurbishment of their properties may require cover for contract works insurance.

Contents of Common Parts

Cover for contents within a property that all tenants share for which landlords are responsible.

Cost of Re-Letting Premises

Where due to insured damage, the Property Owner loses an existing or a prospective tenant, it is possible to arrange cover to include additional costs of re-letting the premises.

Denial or Prevention of Access

Cover should be selected if tenant or lessee is only liable to pay rent whilst they are able to use the premises. Cover is provided for owners loss of tenants’ rent in the event of severe damage to a building or if a street is closed off until the area is made safe. This cover can also be arranged for when access is prevented other than by damage e.g. a bomb alert.

Difference in Conditions/Difference in Limits

Where a lease stipulates that the tenant is responsible for arranging cover, the landlord may arrange cover to ensure that cover is in place on the property to the same extent as that under his own master policy. This can apply to extent of covers and/or policy limits.

Directors and Officers’ Liability

Often of interest to Residents Associations, provides cover for loss/damage to the association due to fraud.

Employers’ Liability

Where a Property Owner is made responsible through the terms of the lease for the maintenance of the property and provision of services, they may directly employ personnel on a permanent or short-term basis. In these circumstances the property owner will need to arrange Employer’s Liability Insurances.

Fidelity Guarantee

Cover for assets (most notably cash) against fraud by employees.

Financial Loss

The lease stipulates the level to which the Property Owner is to provide services e.g. maintenance or utilities. Where the Property Owner has failed to provide services, the tenant may receive compensation for any resulting financial loss. Cover for this may be available subject to a limit.

Latent Defects

Specialist cover for loss/damage resulting from defects in design and construction.

Legal Expenses – Property Owners

If a Property Owner wishes to defend against or take legal action it can be costly. Legal expenses cover can be arranged to reduce these risks and provides for financial compensation and access to expert advice. Cover can be arranged for commercial and/or residential property owners.

Loss of Attraction

This cover extension relates to destruction of or damage to property in the vicinity of the property insured which is regarded as an attraction, that result in a reduction of a number of customers/visitors to the area and therefore the property insured, resulting in a loss of custom to the tenant.

Machinery Damage

Specific cover for lifts, boilers, air conditioning plant, window cleaning hoists and tract, pumps and backup generators can be arranged to cover machinery damage, breakdown and inspection.

Managing Agents’ Premises

The Managing Agents premises clause can be included within the business interruption cover to protect the insured in the eventuality of a loss of rent due to damage at the Managing Agents’ premises. This may be from a loss of records or an inability to operate due to lack of premises resulting in an inefficient collection of rents due, resulting in a shortfall of rent.

Loss of Metered Utilities

Loss of metered utilities supplies can be covered (subject to a limit) following insured damage. Different approaches may be taken where premises are unoccupied.

Non-Invalidation/Non Vitiation

A non-invalidation clause can be included to protect the insured’s interest should the policy be invalidated by the action of a tenant.

Professional Fees

Cover for fees reasonably incurred to reinstate or repair the damage to the property under the material damage cover.

Public Authority Requirements

Covers additional cost of the reinstatement of the damaged property solely to comply with the Public Authorities and European Communities requirements.

Rent-Free Periods

Cover for loss of rent needs to reflect periods when tenants are actually paying rent to the Property Owner. Agreed rent-free periods need to be identified.

Special Indemnities

These apply to covers that attach themselves to transactions relating to ownership in, or the development of land and property. They include:

  • Restrictive Covenants
  • Defective Title
  • Leasehold Indemnities
  • Right of Way Indemnities

Sprinkler Installations – Reinstatement to latent rules

It is possible to cover the increased costs of reinstating sprinkler systems to latest regulations.

Trace and Access

Cover for costs of tracing and gaining access to pipes or other apparatus forming part of a claim for insured damage.

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